Economic gatekeepers are rounding on cryptocurrency as media attention intensifies amid the Bitcoin boom and Coinbase listing.
Finance officials from both sides of the globe are taking the opportunity to criticize the value and utility of cryptocurrencies as media focus intensifies on the space following Coinbase’s direct listing on the Nasdaq.
Bank of Korea governor Lee Ju-yeol said cryptocurrencies had “considerable limitations” as a method of payment, following a monetary policy meeting on Thursday, reports local outlet KBS World.
While asserting that it was difficult to accurately value cryptocurrencies due to their volatile price fluctuations, Lee said the BOK had not shifted on its stance that they had no intrinsic value.
Lee also referenced United States Federal Reserve Chairman Jerome Powell, noting that the head of the Fed shared his sentiments on the crypto space.
Hours earlier, Powell stated in a virtual interview with The Economic Club of New York that cryptocurrencies were purely speculative, adding that they had not been readily adopted as a means of payment.
“They’re really vehicles for speculation. They’re not really being actively used as payments,” Powell said, according to CNBC.
Flying in the face of Powell and Lee’s comments is the recent adoption of cryptocurrency by major global payment processors. Visa, Mastercard and PayPal all began to implement crypto payment options in the past few months, while Tesla introduced Bitcoin (BTC) as a payment option for its electric car business.
That’s not to say Bitcoin and other cryptocurrencies are a sure thing as far as payment methods go. Bitcoin’s average transaction fee is currently around $30 due to its limited block size and resultant network congestion. For this reason, payment processors are often forced to eat such transaction fees as a cost of doing business until they can no longer afford to, as was the case with gaming platform Steam in 2017.
One point of agreement shared by Powell and the crypto community is the suggestion that cryptocurrency could be compared to gold — but for completely different reasons. Cryptocurrency (particularly Bitcoin) proponents argue that the technology can be used as a long-term store of value in the same manner as a precious metal.
Powell, however, intended the comparison to be derisory. The Fed chairman’s opinion of gold seems to be no better than that of cryptocurrency.
“For thousands of years, human beings have given gold a special value that it doesn’t have,” said the chairman of the fiat-printing center of the United States.